Correlation Between Life Electric and Marine Products
Can any of the company-specific risk be diversified away by investing in both Life Electric and Marine Products at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Life Electric and Marine Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Life Electric Vehicles and Marine Products, you can compare the effects of market volatilities on Life Electric and Marine Products and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Life Electric with a short position of Marine Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Electric and Marine Products.
Diversification Opportunities for Life Electric and Marine Products
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Life and Marine is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Life Electric Vehicles and Marine Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marine Products and Life Electric is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Life Electric Vehicles are associated (or correlated) with Marine Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marine Products has no effect on the direction of Life Electric i.e., Life Electric and Marine Products go up and down completely randomly.
Pair Corralation between Life Electric and Marine Products
Given the investment horizon of 90 days Life Electric Vehicles is expected to generate 4.16 times more return on investment than Marine Products. However, Life Electric is 4.16 times more volatile than Marine Products. It trades about 0.03 of its potential returns per unit of risk. Marine Products is currently generating about -0.03 per unit of risk. If you would invest 54.00 in Life Electric Vehicles on August 31, 2024 and sell it today you would lose (29.00) from holding Life Electric Vehicles or give up 53.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Life Electric Vehicles vs. Marine Products
Performance |
| Timeline |
| Life Electric Vehicles |
| Marine Products |
Life Electric and Marine Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Life Electric and Marine Products
The main advantage of trading using opposite Life Electric and Marine Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Electric position performs unexpectedly, Marine Products can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Marine Products will offset losses from the drop in Marine Products' long position.| Life Electric vs. Volkswagen AG 110 | Life Electric vs. Stellantis NV | Life Electric vs. Toyota Motor | Life Electric vs. Honda Motor Co |
| Marine Products vs. Vision Marine Technologies | Marine Products vs. EZGO Technologies | Marine Products vs. LCI Industries | Marine Products vs. Curtiss Motorcycles |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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